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MSc Economics / Course details

Year of entry: 2023

Course unit details:
Financial Economics II

Course unit fact file
Unit code ECON61262
Credit rating 15
Unit level FHEQ level 7 – master's degree or fourth year of an integrated master's degree
Teaching period(s) Semester 2
Offered by Economics
Available as a free choice unit? Yes

Overview

The aims of this course are to:

(i) introduce students to the allocation of risk in economic situations that involve uncertainty;

(ii) establish the link between economics and finance.

Aims

The aims of this course are to:

(i) introduce students to the allocation of risk in economic situations that involve uncertainty;

(ii) establish the link between economics and finance.

Learning outcomes

At the end of this course students should be able to demonstrate:

 

(i) an understanding of security pricing techniques;

 

(ii) an understanding of the analysis of the operation of financial markets using tools from economic analysis;

 

(iii) an ability to relate financial markets to the rest of the economic system

Syllabus

The course will proceed as follows:

1. Uncertainty and risk

  • states of nature
  • contingencies (events)
  • information
  • contingent goods, contingent plans
  • preferences over contingent plans
  • alternative notions of risk

2. Alternative institutional contexts of risk sharing

  • contingent markets
  • security markets
  • real/financial securities, bonds, stocks, options, derivative securities.

3. Individual behavior under uncertainty

  • th

Teaching and learning methods

Lectures and tutorials

Assessment methods

Method Weight
Written exam 100%

Recommended reading

An indicative reference for this material is the book ‘The Theory of Incomplete Markets’ by M. Magill and M. Quinzii (although the technical level of the course will be much lower than in that book). Another reference for the material in this course is the book ‘Security Markets, Stochastic Models’ by Darrell Duffie. This book is recommended for the more technically experienced students. More information about the incomplete markets literature can be found in a special issue devoted to this subject, inside the 1990-91 volume of the Journal of Mathematical Economics. .

Study hours

Scheduled activity hours
Lectures 20
Tutorials 5
Independent study hours
Independent study 125

Teaching staff

Staff member Role
Leonidas Koutsougeras Unit coordinator

Additional notes

Pre-requiste: ECON20120/30320, ECON30432 or equivalent
 

 

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